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Welcoming the R&D Budget boost

23 November 2017

Jumpstart, the UK’s leading R&D tax relief specialist, welcomes the R&D Budget boost – though SMEs will miss out on tax relief changes.

Scott Henderson Jumpstart

Jumpstart has welcomed the focus on innovation in the 2017 Budget, including the increase in the main R&D tax credit rate from 11 to 12 percent, and a further £2.3 billion investment in research and development.

The change is part of a package of measures announced by Chancellor Philip Hammond to support productivity and drive up R&D investment across the economy to 2.4 percent of GDP.

Scott Henderson, Jumpstart’s Managing Director commented: “The plan to bring UK research and developing spending in line with the world’s other rich nations within a decade is just the fillip that beleaguered businesses needs against the Brexit backdrop of uncertainty.

“The commitment to a long-term approach to research and skills training in an attempt to improve productivity signals that Britain is serious about maintaining its primary role as a trading nation.

“However whilst welcoming the increase in the R&D tax relief rate for large firms, it’s disappointing not to see a similar increase in the relief available to SME’s. Over 80 percent of claims in the last financial year were from SME’s – with a cost to the treasury of £1.3bn. Claims by large companies cost the Treasury £1.5bn – yet only large companies are benefitting from a rate increase.

“Otherwise, the Budget does manage to strike the right balance, to create a business and innovation environment which convinces companies of the commercial virtues of making their own investments in R&D without increasing dependency on the public purse.

In the budget the Chancellor announced:

• The R&D Expenditure Credit (RDEC) rate is being increased from 11 to   
12 percent on 1 January 2018. This is the rate which applies to large 
company R&D tax relief.
• Government spending on R&D of a further £2.3 billion in 2021-22, taking 
total spend on R&D in that year to £12.5 billion. 
• Plans to unlock over £20 billion of new investment for innovative firms, 
through a new Investment Fund within the British Business Bank, as well 
as changes to the Enterprise Investment Scheme and Entrepreneur’s 
Relief and encouraging long-term investment by pension funds.
• A major package to ensure the UK is a world leader in electric cars
• Expansion of the ‘Tech City’ concept to become a ‘Tech Nation’ to help 
people start and grow a digital business anywhere in the UK. This will roll   
out support programmes to new hubs in Cambridge; Bristol and Bath;   
Manchester; Leeds and Sheffield; Newcastle; Reading; Birmingham; 
Edinburgh and Glasgow; Belfast; and Cardiff.

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